Non-profit Grant Programs
There are a number of not for profit organizations offering assistance to families in becoming homeowners. These range from the low-income Habitat for Humanity program, which is a wonderful program that helps families in truly desperate situations to Responsible Home Ownership, AmeriDream and Nehemiah, which are programs available to any family regardless of income to assist in realizing the dream of home ownership.
Responsible Home Ownership
Not as well known as Nehemiah, but in many ways a superior program. The Responsible Home program offers a 5% grant to the buyer, rather than Nehemiah’s 3%. This makes it useful with conventional 5% down loan programs, which makes a broader range of homes available that may not qualify for an FHA loan. Responsible Home, as its name implies, also promotes responsible home ownership by requiring that buyers take a short course that gives them basic information on everything from maintaining their new home to how to handle payments if they ever hit financial difficulties. Of course, the course doesn’t teach it all, but the materials buyers receive and the information resources they are given can help in many situations. Sellers must, as with Nehemiah, pay a program participation fee in this case equal to 6% of the sale price and provide a one year home warranty and a two year roof warranty.
Nehemiah Loans
The Nehemiah program offers buyers a 3% grant from a nonprofit organization to assist in their home purchase. The home is required to have a one year home warranty and a 2 year roof warranty, paid by the seller. This is usually combined with an FHA loan and seller paid closing costs to achieve a very low down payment. As long as the house will appraise for the higher price, it is possible to offer a seller more than the asking price to entice him into paying the higher fees associated with the Nehemiah program.
The Department of Housing and Urban Development (HUD), of which the Federal Housing Administration (FHA) is a part, has issued a final rule for FHA loans prohibiting the use of seller funds for the down payment including indirect use of seller funds through charities. The rule goes into effect October 31, 2007, though AmeriDream and Nehemiah have each received an extension to allow them to continue for several months.
